Barclays MLP Income Picks: TRGP, WMB, OKE, KMI, PAA

By Michael Aneiro

Beyond recommending income investors check out dividend-paying utility stocks, Barclays urges investors to look into master-limited partnerships, calling the MLP selloff late last year “not sustainable” and offering the following MLPs for investors to target in 2013:

Targa Resources Corp (TRGP): Barclays calls TRGP “a levered play on NGLS (Targa Resources Partners L.P. the underlying MLP), which stands to benefit from growth in natural gas liquids production in the United States given its attractive positioning in the NGL downstream infrastructure space…. We forecast TRGP to grow distribution 36% in 2013, driven by $1.9 billion of organic projects under execution. This level of growth puts TRGP’s growth among the highest in the GP space.”

Williams Companies, Inc.: (WMB): “WMB trades at a 3.9% yield, which we believe is a roughly 100bps discount to peers with similar dividend growth rates. We think this discount should narrow over time, especially as the company continues to grow its fee-based businesses and decrease its commodity exposure with the execution of its project backlog. This would add upside to our current price target of $38 which is currently predicated on the current yield.”